Indian insurance platform InsuranceDekho has raised $150 million in a Series A funding round, as the decade-plus company looks for M&A opportunities at a time when the market downturn has hit the majority of startups in the South Asian nation.
Goldman Sachs Asset Management and TVS Capital co-led the Series A funding round for the 13-year-old startup, they said. The round includes some debt, around $40 million, but its executives said more than half of the raise went against equity.
The Series A funding values the Gurugram-based startup, which was incubated within the car market group of unicorn group CarDekho, between $475 million and $500 million, according to a person familiar with the matter. In an interview with TechCrunch, InsuranceDekho executives declined to comment on the startup’s valuation, but said they were in the “soon” club. Investcorp, Avataar Ventures and LeapFrog Investments also participated in the round.
SafeDeko it works with the majority of insurers in the country and has direct integration with close to four dozen firms through which it offers close to 400 insurance products. Auto coverage is currently the most popular insurance product the startup sells, he said, as it prepares to expand into the health and life categories, as well as serving small and medium-sized businesses.
Current insurance penetration in India remains below 5% of GDP, compared to 12% in the US. An average Indian earns about $2,100 a year, according to the World Bank. The ICRA rating agency estimated that of Indians who bought an insurance product, they spent less than $50 on it in 2017.
Ankit Agrawal, co-founder and CEO of InsuranceDekho, said the startup has established a presence in about 98% of all postcodes in the country, giving it an opportunity to go deeper as the market matures. Although InsuranceDekho is not a household name in urban Indian cities, Agrawal said the startup is selling more than 80% of all its coverage in smaller Indian cities. By the end of fiscal year 23, InsuranceDekho aims to pay out total premiums worth more than $240 million, he said.
“We need to go beyond urban regions when it comes to insurance penetration in the country. To achieve our goal of democratizing insurance for the general public, we are expanding our reach and will continue to build on our technology-based solutions and trained advisors so that they can serve all the towns and regions of India by the end of the year.” Agrawal said.
Today, InsuranceDekho employs over 80,000 gig economy workers called ‘agents’ to educate the market and sell insurance cover. Agrawal argued that the largest India is currently not ready to download an app and purchase an insurance product. They need knowledge of its benefits and someone they can ask questions, she said. The startup plans to more than double the workforce of agents, who are not its employees, by the end of the year.
Dozens of companies, including Digit, which is seeking to go public, PolicyBazaar, and Amazon-backed Acko, which is in late stages of deliberations to raise a round, as well as Paytm and PhonePe, sell insurance products in India. The arrival of fintech giants in the category, Agrawal argued, is indicative of the size and opportunity of the market.
The key to increasing the adoption of insurance products in India is access to the lower middle and middle income class, Praveen Sridharan, a partner at TVS Capital, said in a statement.
“InsuranceDekho, with its agency model and digital DNA, offers a powerful mechanism for this penetration to expand. We are convinced of the InsuranceDekho model. Of course, we always back founders who can prove to bring alpha and have been impressed with Ankit and the team based on their ability to execute, operational excellence, and superior technology skills. We are delighted to partner on his journey to enable access to insurance products to all 600,000 villages in India,” he added.
InsuranceDekho also plans to deploy the fresh funds to acquire smaller companies that could increase its capabilities or give it a broader geographic advantage, InsuranceDekho’s Agrawal said.
The start-up funding comes at a time when many other companies in the country are struggling to raise new funding as investors grow wary of market conditions.
